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January 17, 2013

Los Angeles Check Cashing Store, Head Manager and Compliance Officer Sentenced for Violating Anti-Money Laundering Laws

Filed under: California Defense Attorney — Tags: , , — fayarfa @ 7:43 pm

Sentences Handed Down in Enforcement Initiative Aimed at Check Cashers that Violated the Bank Secrecy Act

LOS ANGELES – A Los Angeles check cashing store, its head manager and its designated anti-money laundering compliance officer were sentenced today for failing to follow federal reporting and anti-money laundering requirements in relation to more than $8 million in transactions.

G&A Check Cashing, a business located in the Westlake section of Los Angeles; its manager, Karen Gasparian; and its compliance officer, Humberto Sanchez, were sentenced today by United States District Judge John F. Walter for violating the Bank Secrecy Act (BSA).

Judge Walter sentenced Gasparian, 31, of Canyon Country, to five years in federal prison. In sentencing Gasparian, Judge Walter rejected the defendant’s arguments that he had simply failed to comply with complicated regulatory schemes. “It’s obvious he knew exactly what he was doing – laundering money,” Judge Walter said.

Sanchez, 51, of Alhambra, was sentenced to eight months in prison. And G&A was ordered to pay a fine of $962,932 as part of two-year period of probation. In addition, Gasparian and G&A were ordered to forfeit $240,733, which represents the profits they earned on funds going through G&A for which currency transaction reports (CTRs) were not filed.

G&A pleaded guilty in October to one count of conspiring to fail to file CTRs on transand one count of failing to have an effective anti-money laundering program. Gasparian pleaded guilty in September to the same charges. Sanchez pleaded guilty in October to one count of failing to have an effective anti-money laundering program.

The BSA is a set of laws and regulations enacted by Congress to address an increase in criminal money laundering through financial institutions, which includes check cashing businesses. Check cashers enable people to cash checks without having to go to a bank or maintain a bank account.

Under the BSA, financial institutions, including check cashers, are required to file a CTR with the Department of Treasury for any transaction involving more than $10,000 in currency. As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction, the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction. CTRs are important law enforcement tools for uncovering criminal activity.

The BSA also requires financial institutions, including check cashing businesses, to maintain an effective anti-money laundering program. Check-cashing businesses are required to have written policies and procedures regarding CTR filings, records maintenance and responses to law enforcement.

G&A, Gasparian and Sanchez failed to, among other things, create or retain required records, verify customer identification and file required reports such as CTRs.  As a result, G&A and Gasparian engaged in multiple transactions involving $8,024,446, in which required CTRs were not filed.

According to court documents, check-cashing businesses are a common venue for individuals who want to anonymously cash large numbers of checks to facilitate fraud and money laundering schemes, precisely because they often fail to file required reports and to have effective anti-money laundering programs. The use of check cashers to launder money is particularly prevalent in the area of health care fraud, where fraudulent health care businesses commonly convert the proceeds of their fraud into cash by presenting checks to check cashers who they know will not ask for proof of the identity and will either not file CTRs or file false CTRs, according to the documents.

Aaron Krkasharyan, 48, of Los Angeles, pleaded guilty last year in a related case for making false statements to federal law enforcement officials investigating BSA violations at G&A. Last Monday, Judge Walter sentenced Krkasharyan to three years probation, which included a six-month term in a residential reentry center, and ordered him to pay a $10,000 fine.

The indictment filed in the G&A case was one of four indictments unsealed on June 14, 2012, that charged several individuals and check cashing businesses in Los Angeles, Brooklyn and Philadelphia with failing to file CTRs or falsely filing CTRs, as well as failing to have effective AML programs.

In another Los Angeles case included in this prosecution, AAA Cash Advance and its manager, Diana Brigitt, pleaded guilty in federal court in Los Angeles last September to various BSA violations. Brigitt pleaded guilty to eight counts of failing to file CTRs and one count of failing to maintain an effective anti-money laundering program. AAA pleaded guilty to one count of failing to maintain an effective anti-money laundering program. AAA, which agreed to shut down, was sentenced in October to a statutory maximum term of five years probation and was also ordered to pay a fine. At sentencing later this year, Brigitt faces a statutory maximum sentence of 45 years in prison and a fine of $2.25 million.

The G&A case was prosecuted by the United States Attorney’s Office in Los Angeles and the Money Laundering and Bank Integrity Unit of the Justice Department’s Asset Forfeiture and Money Laundering Section.

The case was investigated by the Federal Bureau of Investigation, IRS Criminal Investigation and the U.S. Department of Health and Human Services’ Office of Inspector General (Los Angeles region). The Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) provided substantial assistance.


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